Yes indeed everyone is having issues today with their software that does all the calculations and forecasting. Wade Miquelon, the former CFO missed on the numbers. From reading the Wall Street Journal it appears that price increases were one area that was not factored in properly with Medicare Part D. We already know that Walgreens has a stock buy back program to finance and perhaps the closure of the Flagstaff, Arizona warehouse was maybe a start of more cuts to come?
Walgreens Closing Distribution Center in Flagstaff Arizona - 345 Jobs Lost While Senator Durbin of Illinois States They Are Turning Their Backs On the US Should They Move Their Headquarters Outside the US
We all talk about complexities and have to rely on software to help us today by all means but it’s still what parameters are entered and what may be left out, under the direction of the CFO in this case. Investors seemed to feel that the finance and pharmacy units were not communicating in hind sight here. When companies get big and have a large number of subsidiaries, the harder it gets to keep your numbers straight. We are seeing this too with health insurance companies with some public flubs out there as well. BD
A billion-dollar forecasting error in Walgreen Co. WAG -0.03% 's Medicare-related business has cost the jobs of two top executives and alarmed big investors.
At an April board meeting, Chief Financial Officer Wade Miquelon forecast $8.5 billion in fiscal 2016 pharmacy-unit earnings, based partly on contracts to sell drugs under Medicare.
Last month, directors got a shock. Mr. Miquelon suddenly cut that forecast by $1.1 billion.
In early August, the CFO of the nation's largest drugstore chain was gone. Walgreen said several days earlier that its pharmacy chief, Kermit Crawford, would retire at year-end.
Behind the botched numbers and management shake-up are Walgreen's efforts to capture a larger role as a middleman dispensing prescription drugs under Medicare's Part D, which subsidizes costs for the elderly and disabled. The saga at Walgreen—which derives 25% to 30% of its prescriptions from Medicare Part D plans—shows the broader risks for those operating in the Medicare ecosystem.